Inside incorporated was issued a charter on january 15 authorizing the following capital stock: common stock, $6 par, 100,000 shares, one vote per share. preferred stock, 7 percent, par value $10 per share, 5,000 shares, nonvoting. the following selected transactions were completed during the first year of operations in the order given: issued 20,000 shares of the $6 par common stock at $18 cash per share. issued 3,000 shares of preferred stock at $22 cash per share. at the end of the year, the accounts showed net income of $38,000.prepare the stockholders' equity section of the balance sheet at december 31.

$1,114,000   -  total equity section

Balance sheet extract

common stock   (120,000 units)                   $720,000

common stock share premium                     $240,000

preference shares (8 000 units)                   $80,000

preference share premium                            $36,000

Profit (net income)                                           $ 38,000

                                                                          $1,114,000      

Explanation:

common stock account (100,000 + 20,000) x $6 par value = $720,000

common stock premium per unit is calculated $18 minus par value of $6 = $12. total premium is 12 x 20,000 units issued= $240,000

Preference shares account = (5000+3000) x $10 = $80,000

preference share premium (22 minus 10) = $12 per unit

total preference shares premium is $12 x 3000 issued units= $36,000

answer; automated fingerprint;

answer; balance sheets;